NRP - Earnings call transcript Q1 2022 | Natural Resource Partners L.P.

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Operator

Good day, and thank you for standing by. Welcome to the Natural Resource Partners LP First Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Tiffany Sammis, Manager of Investor Relations. Please go ahead.

Tiffany Sammis

Thank you. to Resource welcome XXXX first and call. conference morning, the Partners' Natural quarter Good being a webcast, available is call Today's and website. on replay our be will

Joining Executive Vice Chief President Chief Craig Officer; President. me Chris Financial Craig, Officer; Zolas, and Kevin and today are Operating Nunez,

other future any that differ our about and could actual to and today materially discussed cause our to NRP's in comments for NRP's filings. involve statements. undertake matters of include Exchange forward-looking our any These Some reflecting forward-looking risks from risks statements We XX-K Commission may views These are revise events. Form and or forward-looking reason. uncertainties Securities no obligation update publicly statements results

Our measures. today comments include non-GAAP also financial

measures which our quarter intend operations like do or Additional for details and to be reconciliations can to market we any the fundamentals. particular to website. GAAP included press remind first are the I release, not on discuss comparable most our found that would detailed outlook everyone in or co-lessee directly

I you Soda commentary our Resources' specific Sisecam for refer to public regarding and business disclosures questions segment. Ash addition, In

Officer. I to would call Operating the to Nunez, Now our Chief and turn Craig President over like

Craig Nunez

unitholders. We million Thank of representative foreseeable quarter, our of performance common rate, to morning, We business we we the accelerate additional year you, deliver the of advantage as And performances future. of the partnership. this best to return deleveraging cash plan run everyone. Tiffany, of in in expect the free quarterly consolidated improved anticipate our take for which generated and and the to financial to flow the $XX cash one good first is the history

supply can rebounding per Strong XX% we from response announced reach for our levels. have to be global last levels, and significantly to over yet coal muted same to and metallurgical year, the Canada. prices today demand met $X.XX. As Australia exports unit in pre-pandemic driven production a from distribution met Despite has increase relatively steel a coking result, historically and the a said high quarterly for coal U.S. for $X.XX

While are on Ukraine remain thermal exacerbating meet chain providing to the disruptions impact is and to the thermal coal LNG Labor impact expect for activists steel Russian for tight foreseeable limiting coal gas boycott of from restricted COVID-XX and in from for and operators to support to and pressure support and strong the starting pricing. additional institutions are providing markets and exports ability corresponding production is for in negatively supply-demand for thermal coal met supplies. governments, growth prices. increasing natural future, in demand war The production, power increase of tightness, regulators, China benefiting further supply shortages, financial further the balance are demand. market electric coal Thermal generation we lockdowns

We expect term. these for thermal factors elevated keep near the to prices levels at

Our investment also benefiting historically in prices. ash from high soda Sisecam is Wyoming

very and of quarter strong, has trends to to average increased auto the year. given Export of and more the renewable favorable, energy, believe the doubling electrification for improving been global particular, in the constrained a Wyoming demand ash XX% first prices, previous XXXX more remains outlook basis urbanization. due year-over-year long-term global secular supply. the Sisecam We fleet realization net the in compared Our soda than have of than on by

in flow in interest generated first free of quarter. $XX cash million Wyoming the Our Sisecam

and at that Sisecam the received time $X that recall had $XX They and during distributions February. pandemic. distributions You'll November, in million million ceased in resumed we paying

economy. We to continue our the on on transitional identify capitalize large working opportunities to footprint energy acreage

this year. fourth COX the lease announced subsurface quarter year quarter first COX sequestration in transaction in we timber last recall, sequestration you'll first of As of and the our first our

over months. the flow So in free summary, NRP last generated of XX cash $XXX million

is cash cushion, our common is amortizations debt preferred cash after our and units, placement flow remaining significantly. flow and distributions private on the Our rising which free paying

foreseeable business lockdowns the the results. global distributions. for the performance to quarters committed down with the are over COVID-XX our debt, turn remain our We the in I'll optimistic that, we While China and future. recent paying lines, capital strong war and risks realized to pose common to in Chris Ukraine structure that solidifying call will unit paying cover and economy in And continue to the financial

Chris Zolas

morning, good Thank everyone. you, Craig, and

$XX of the income. flow million During cash $XX and generated net of operating first we million quarter,

million made Rights of first prior Our $XX $XX income an respectively, the and driven of XXXX, coal which million up million, total improvement XXXX. of XX% of Mineral volumes our and segment in royalty demand the of generated coal, over revenues royalty metallurgical pricing of first during $XX cash our million $XX and sales quarter net and the coal quarter flow operating for of year quarter by XX% stronger

a the segment. financial prior as of regular income international year XXXX in their million, distribution first the quarter to million $XX reinstate of because cash quarter result higher performance. year compared of Net flow of improvement pricing $XX quarter the business was quarterly XXXX Sisecam to Wyoming's Moving the in the first improved improved million in November decision of $X compared as Free as to primarily an to Ash to due in our XXXX. previous Soda quarter

first free Corporate in significantly quarter compared for decreased improved $X compared and XXXX to costs XXXX as prior results of paid an the to Segment quarter the increase prior quarter. flat million the operating primarily first incentive year. to of of were relatively cash quarter Financing due last in segment flow year because out year the as Our compensation

was partially of because debt cash offset lower for interest less decrease outstanding. by this paid However,

XXXX, of we a and for distribution paid the our distribution fourth to in preferred per $X.XX quarterly February million quarter distributions, of unit $X.X of Regarding common quarterly XXXX. cash a unitholders

we all at par paid-in-kind In of first during redeemed also quarter addition, outstanding units preferred the XXXX.

based unit turn in increase $X.XX increase our announced free flow for to remain our to generation, higher and back steadfast cash distributions the financial solid pay plan cash of We to first to coupled unitholder an tax continue and with resulting common expected liquidity We we the common the performance. unit call that, improved common lines, for the take liability debt distribution deleveraging in business XXXX. over operator advantage today, the return our quarter using to of cash for common down the strong The free our flow mentioned, And income strategy accelerate to was to $X.XX on previously flow capital our generation unitholders. I'll unitholders solidify outlook with our from per positive for our and questions. Craig XXXX, from to substantial decision As cash to more structure.

Operator

Sean Farinaccio Rosen Instructions] first comes Equities. the line from [Operator question from of Your

Your line is open.

Sean Farinaccio

a how at PIC paid of are just that's about cash shares, XX% but the the structure down outstanding I capital high the wondering you free cost I'm you thinking guys guys enterprise piece here. the preferreds and flow that generating guys you capacity know pretty have. given capital

can So can whether are about I if guys that main guys question. question, on had I'm you another my something you wondering you but that's thinking be seeing And residuary might address. that perspective

Craig Nunez

this, at following for a question. Thanks stab can take I'll then ask and the question. you your

that million end at $XXX have you're the we to. debt And of quarter. million the referring of the then outstanding We preferred have $XXX

and that, we reach those either going reducing are reduces getting bonds premium to interested in them We time, looking pay premium to point buy that such on to our point, make distributions, we comfortable for we example, there we difficulty think preferreds feel point call that preferreds as the redeem One order the for exposure like it, a it to I to point preferreds. feel pay If pressure the a balances to at debt we want redeem those comfortable off in those have primarily is over companies back. that, refinancing, redemption preferred a were about to they redemption, clearly today, where out where us, goes to to them $XXX excess typically as refinance having those is be that can I'd that of the the them given with when obtained that coal, Once focused and to we get I we in thing we're would then XXXX mature. in million, $XXX million and down. we redemption or

tackle give downturn the lines. event initially the preferreds economic of Furthermore, those point near out in flexibility there's or - more to in very So would business disincentive them from preferreds the specific equity a to have in us significant of I our term. some that one characteristics that

having us. to so cost And the versus those flexibility of XX% them the that with we having debt provides have balance

them, a put there past, position in we in the business. position whereas payment, unable out so the trigger future, been benefits are it doesn't preferreds, where instance, for of to find those if were of make an as a to events us the of One trigger It we that But unable we for the business, in of the if pay with default the a are a is no - could speak. not-too-distant the we default if default. in, interest doesn't so of ourselves to preferreds in difficult we've were one -

Sean Farinaccio

pieces were reduction of That lot you makes also at a in coupon not I able it. context opco far not bond is significant too X.XX% the was one I is a in debt as the pay expenses Got long down it's obviously, XXXX of And to especially here. ones, sense guys the -- various guess, of still off. as interest

Craig Nunez

is off every we units. We're are to - buyback debt our it of cash merits cushion and is to looking increase at this paydown, considering Let the our opportunity the preferreds, constantly - to pay evaluating flow is accelerate use it to to it that, economic it me the excess is pay of best distributions. the add that is cash of We're constantly continuously down those. the it

Sean Farinaccio

conventional that know more wondering about move-up any on through year we to that cash thermal not year, total about to reflected high - But over it's like a specifically, payments stock cash you I return-wise, even coal sense lessee, with and any hard - flow become to place on the received? that you that new if the of that, we know of a the to this and specific with fixed you're the had in segment? I implied can proportion arrangement here pretty because payment payment of expect in coal know like if relative And But place thermal to Yes. you - segment? was It segment go expired that Rights sort this cap, agreement you smaller - we free year free in performed that Mineral with flow on market we revenue. P&L that guys' certain can been received fixed be might it's the type But the overall But guys yield Or well, your quantify color wondering holistic units the I also of here. have be fixed any that's relative last a coal the as the thermal further a like of your them. to entirely was I it's very that impact could whether on me generation company more the not I have holistic understand to substantial co-lessee. other the that thermal multiple shareholder year on be performance know royalty like did know - cash I expect though the now comment the but was has I going coal it. think we obviously I kind flow the course - annualize the sustained, of I last arrangement have free makes has by primary

Craig Nunez

That's a take question. it's that. let an important smaller to portion, I'm It's a the good portion. you going first Kevin, but at stab

Kevin Craig

over price. sales in this tell moves a the is the And downward of prior That's oftentimes payment of was lessee across business, arrangement over under the up moves that you I to that's pricing in with Thanks, what we're that fixed And upward the believe, our - Sure. back will but this some plan market. prior seeing that to robust move coal I Craig. We all to here, our And be of percentage thermal past. contracted in tons contract we in believe are portfolio, royalties time, time. pricing. will the or catch upward lease will gross would that

Sean Farinaccio

sense It makes me. to

Kevin Craig

Does that make sense?

Sean Farinaccio

what terminal, I'd significant spot like It's just could we by pricing wondered see royalty Yes, completely. there. I see And the that.

Kevin Craig

We see that.

Craig Nunez

matter. have how coal, As it off market you receive sell lessees - for have that and of sell of and other that you over contract lessor, control, minerals - or price that so their a they don't royalty course, your a And for.

a lessee period their to for of feels best And contract sometimes, time. interest it in an it's extended

the sometimes And works lessee the of lessor. that to and the advantage

Sometimes little we to that." you contracts wish off and bit back wouldn't pricing. I those look a and see better have say, roll it's so we But we you "Wow, be - going before start to think longer contracted

Sean Farinaccio

It makes a color. great lot sense. That's of

Craig Nunez

Yes. That's principally though. just Illinois in - the that's Basin,

Operator

are like back turn go to to Please there questions. ahead, call As no Craig now the would further I sir. Nunez.

Craig Nunez

to hay Wind's we in to sun attempting future. metaphors, our side as hay for now, in that the for confuse call. sails. of our everyone, operator, the be for you going our and most improve us, NRP. stakes and - company much being with in joining you've income you, you, we're the can thank - Right been as but quite good we've either you - faithful the a business is for back, well I work Thank Appreciate our the our and the business story have while know us with to hay and position having wind on been long-term lines, to while make that at it's fixed the sorry a now, time our right turnaround had. to shines. now, and And and partnership we to equity plans quite the to or our a accelerate are

will before. So thanks if we Thanks to not for you talk next your time. support, and your you. quarter, for Thank

Operator

you And for today's concludes this call. all Thank participating.

You may now disconnect.

Natural Resource Partners (NRP) 8 May 222022 Q1 Earnings call transcript